ECONOMY

Sofia deals killer blow to Burgas-Alexandroupoli project

Bulgaria last week dealt what appears to be the final blow to the Burgas-Alexandroupoli oil pipeline project after announcing its decision to walk out of a trilateral agreement signed with Greece and Russia in 2007.

The statement, made by Bulgarian Finance Minister Simeon Djankov, did not come as a bolt from the blue but was rather the inevitable conclusion of repeated attempts to undermine the project by Boyko Borisov?s administration since it came to power in 2009. Paradoxically, the announcement came a month after a positive evaluation report published by the country?s Environment Ministry. At the time the report had been interpreted as a sign that the Balkan country would eventually back the project. Expectations were soon to be defeated though.

The Borisov government, which originally attributed its skepticism toward the pipeline to environmental and financial concerns, this time challenged the trilateral agreement. Two days after Djankov?s statements, which were broadcast in the local media, Athens and Moscow still had received no official notification from Sofia. Failure to do so naturally irked the two countries? governments.

Some observers argue that Bulgaria is probably seeking to renegotiate the trilateral agreement which it considered to be weighted heavily in favor of Russian interests. Bulgaria gave Greece and Russia 12 months to voluntarily annul the deal – something that was not foreseen in the agreement.

Most analysts attribute Bulgaria?s stance to the recent election of Rosen Plevneliev, who belongs to Borisov?s center-right GERB party, as Bulgaria?s president. Outgoing President Georgi Parvanov was a champion of the trans-Balkan oil pipeline. The volatile political situation in Russia is also seen by analysts as contributing to the decision.

However, a number of geopolitical factors seem to have come into play as well, such as whether or not Kazakhstan – where US companies have a strong presence – would be involved in the project.

In any case, Sofia?s decision to abandon the Burgas-Alexandroupoli pipeline project is closely connected to broader geopolitical developments in Southeastern Europe.

The global economic crisis and the discovery of new oil and gas deposits are shifting the geopolitical equilibrium regarding control of resources and transit routes.

Officials at Trans-Balkan Pipeline, the company in charge of the project, insist the project is necessary. ?It is the only plan which offers an economic outlet for the Caspian Sea oil deposits, bypassing the Bosporus. The alternative [route offered by the] Samsun-Ceyhan pipeline is far more expensive and does not serve Russia?s intentions of reducing dependence on Turkey,? sources inside the company said.

Greece is awaiting an official explanation from the Bulgarian government to decide where to go from here. ?Greece will stick to its steady strategic policy regarding the usefulness of the Burgas-Alexandroupoli oil pipeline project for Greece and the usefulness of the pipeline in supporting Europe?s energy security,? said Deputy Energy Minister Yiannis Maniatis.